October 4, 2012
More Motorola Layoffs On The Way Warns Google
Enid Burns for redOrbit.com — Your Universe Online
In the several months since Google acquired Motorola Mobility in May, it seems that the only news that's come out of the $12.5 billion acquisition has to do with job losses. After a round of Motorola layoffs in August that cut 20 percent of the unit's employees, Google has issued a warning of further cuts in a recent SEC Form 8-K/A filing.
In the SEC filing, Google estimates charges of approximately $300 million for severance-related charges and other expenses to be paid out in the third quarter of 2012. While it has not specifically stated so, Google might be spending more on dismissing certain operations and facilities, rather than strictly letting employees go. Google said the planned restructuring actions are focused primarily on operations outside of the U.S.
"Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the U.S.," the SEC filing reads.
Further details outlined the cash outlay. "Based on current information, Google expects to incur severance-related charges of approximately $300 million, which will be recognized in the third quarter of 2012."
In August, Google estimated expenditures of $275 million in severance charges, according to Mashable.
The mention of facility and market exits suggests that Google is discontinuing the development and manufacturing of basic cell phones, and plans to concentrate on Android-based smartphones going forward. If true, the news is consistent with rumors that are currently circulating on the market.
A New York Times article reports that Google intended to downsize Motorola's operations in Asia by exiting unprofitable markets and discontinuing the production of low-end devices, according to a Reuters report. Reuters also states that analysts have expected Google to shut down a number of Motorola's legacy businesses.
Basic cell phones and feature phones don't seem to fit into Google's agenda of advancing and protecting its Android platform. Patents held by Motorola played a large factor in the acquisition of Motorola Mobility. The relevant patents pertain to features for Android phones.
Google's Motorola Mobility unit was left with roughly 16,000 employees after Google cut 4,000 jobs in August. The search engine giant stated that the expenditure will go toward severance-related charges, as well as facility and market exits. Cuts could include fees paid to exit operations with contract facilities where the employees are not Google or Motorola Mobility employees.
Specific numbers on when and how many cuts Google will make are not yet available. However, Google is expected to make a move by the end of the year, as stated in the SEC filing.
The winding down of Motorola Mobility operations are not likely to stop here. Google warns that this action may continue into 2013, with future cuts being likely.
"Motorola continues to evaluate its plans and further restructuring actions may occur, which may cause Google to incur additional restructuring charges, some of which may be significant," the SEC statement read.